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The Directors have pleasure in presenting the 23rd Annual Report of your Company for the financial year ended 31st March 2018. The Management Discussion and Analysis (MDA) is an integral part of this report.
The financial performance of the Company for the year ended 31st March 2018 is summarized below. The financial statements for the year have been prepared in accordance with the new mandatory accounting standard Ind AS and necessary changes were made to the corresponding figures of the previous year.
Standalone (Rs. in Lakhs)
Year ended 31.03.2018
Year ended 31.03.2017
Revenue from operations
Earnings Before Interest & Tax (EBIT)
Profit/ (Loss) Before Tax (PBT) and exceptional items
Exceptional items / Extra-ordinary Items
Profit / (Loss) Before Tax
Profit / (Loss) After Tax (PAT)
Add: Brought forward from previous year
Less: Dividend on equity shares (incl. taxes)
During the year under consideration, the Company improved its margins on its IT Products and Technical Services due to productivity improvement measures and cost management initiatives undertaken. The margins from Distribution business was also higher owing to higher volumes of mobile phones distributed by the Company. The revenue figures are not directly comparable due to method of accounting followed on account of GST effective 1 st July, 2017.
Earnings before interest and taxes for the year have almost doubled to Rs. 2,218 lakhs from Rs. 1,154 lakhs, thanks to strong performance from almost all our segments. IT Products and Technical Services turned around significantly to post an EBIT of Rs. 1,106 lakhs in FY 17-18 from a loss before interest and taxes of Rs. 116 lakhs the previous year. The EBIT from Distribution Services also increased to Rs. 1,261 lakhs from Rs. 963 lakhs. Other income for the year was at Rs. 220 lakhs vis-a-vis Rs. 307 lakhs the year before. The growth in EBIT has resulted in the Company’s Profit Before Exceptional items rising to Rs. 2,076 lakhs in FY 17-18, from Rs. 873 lakhs the previous year.
The free cash flow growth continued to be robust for the third year in succession resulting in reduced borrowing and consequently reduced finance cost to the Company. During the year, as part of consolidation exercise, the Company shifted its small PoS products manufacturing facility from Oragadam, Chennai to its main facility at Dehradun.
The profit before tax for FY18 was Rs. 2,445 lakhs, an almost three-fold increase from the previous year’s number of Rs. 873 lakhs. The PAT increased to Rs. 1,624 lakhs from Rs. 633 lakhs.
During the year the Company successfully amalgamated its wholly owned subsidiary Prime Property Holdings Limited (PPHL) with itself, after requisite approvals from its shareholders and the National Company Law Tribunal. This added over Rs. 7 cr to the net worth of the Company.
FY18 had been a year of watershed reforms in India, which have turned out to be disruptive for businesses that were ill-prepared for change. Even as India Inc was in the process of recuperating from the demonetization of high-value currency notes in November 2016, the Centre decided to expedite the transition to Goods and Services Tax, which was introduced with effect from July 2017.
However, the Company had viewed both these policy actions as opportunities to leapfrog its market share and growth metrics. The supply chain was thoughtfully planned in advance of the GST rollout, timely changes in tax rates and procedures were incorporated into the ERP application, and channel supplies were enhanced to captalise on the momentum. The market was quite receptive to early movers post- GST. As a result the Company registered over 30% volume growth in Thermal and Label Printers and over 23% in Scanners for the year. However, traction in business from the Government and the banking sector remained subdued even several months after the introduction of GST.
On the Technical Services front, there was significant improvement in the last quarter as the Company bagged new enterprise orders to install and service EDC terminals, Air Conditioners, TVs and IT assets.
During the year, the footprint for the Company’s retail walk-in services was extended to 119 partner centers and 54 own centers. The take-off in consumer electronics is expected to generate considerable growth potential for this technical services business, as there are a very few national players in this segment. Leveraging on its rich experience, the Company continues to provide best in class services to the customers with a strong value proposition to the brands it is associated with.
The Company has renewed its Distribution contract for the year and has commenced selling television sets in addition to mobile phones and accessories. With installation capabilities added to this offering, it may usher in synergistic benefits to this segment. Nonetheless, your Company views the dynamics of Distribution services segment as very volatile and susceptible to macroeconomic and regulatory changes.
The Directors are pleased to recommend a dividend of Rs. 1.50 per equity share for the financial year ended 31st March 2018 (Previous Year 50 paise per equity share). The dividend, if approved by shareholders would absorb Rs. 336.58 lakhs, including taxes (Previous year 112.54 lakhs, including taxes) on 1,86,12,818 Equity Shares of Rs. 10/- each and will be paid to all the equity shareholders whose names appear in the Register of Members of the Company and depositories as on 2nd August 2018.
The Company is fully committed to the ultimate goal of employee safety. Safety training and safety audit are frequently conducted enabling the Company to maintain an accident-free record at its factories for several years.
Code of Business Conduct and Ethics
The Company has in place the Code of Business Conduct and Ethics for member of the Board and senior management personnel (the Code) approved by the Board. The Code has been communicated to directors and the senior management personnel. All the members of the Board and senior management personnel have confirmed compliance with the Code of Business Conduct and Ethics for the year ended 31st March, 2018. The Annual Report contains a declaration to this effect signed by Chief Executive Officer. The Code is available on the Company’s Website www.tvs-e.in.
Vigil Mechanism / Whistle Blower policy
The Company has established a vigil mechanism, which is overseen by the Audit Committee. The Chairman of the Audit Committee has been appointed as the Ombudsman for the Vigil mechanism. The policy provides a formal mechanism for all directors, employees to report to the management, their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Company’s Code of Business Conduct and Ethics policy. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning Company. The Policy is available on the Company’s Website www.tvs-e.in.
Prevention of Insider Trading
The Company has a Code of Conduct for Prevention of Insider Trading in line with SEBI (Prevention of Insider Trading) Regulations, 2015. The Code has been communicated to all the employees at the time of orientation and adhered to by the Board of Directors, senior management personnel and the other persons covered under the code. The Company follows closure of trading window prior to publication of price sensitive information. The Company has adopted Fair Practices Code (FPC) as per the regulations. Code of Conduct for Insider Trading Regulation and the Fair Practices Code are available on the Company’s Website www.tvs-e.in.
During the year under review, the Holding Company M/s. TVS Investments Private Limited (TVSI) [formerly Sundaram Investment Limited] was converted into a private limited company with effect from 2nd November 2017, vide Order of the National Company Law Tribunal dated 21st June 2017. TVSI holds 59.96% of the outstanding equity in the Company as on 31st March 2018 (previous year: 59.96%). The change in the constitution of the holding company does not have any impact on the Company.
Scheme of Amalgamation
During the year, Hon’ble National Company Law Tribunal (NCLT), vide its order dated 27th March 2018 sanctioned the Scheme of Amalgamation of Prime Property Holdings Limited (PPHL), its wholly owned subsidiary with the Company. The Scheme came into effect from 29th March 2018. The Appointed date of Scheme was 1st April 2016. The Scheme was approved by NCLT without any modification. The investment made by the Company in PPHL amounting to Rs. 5 Lakhs consisting of 50,000 Equity shares of Rs. 10/- each was cancelled. The Board of Directors of PPHL has also ceased and PPHL was dissolved without any process of winding up with effect from 29th March 2018.
Benani Foods Private Limited
Benani Foods Private Limited (Benani), a company started in the year 2014, is manufacturing and trading ‘ready to eat’ and ‘ready to cook’ products. Benani was an associate of Prime Property Holdings Limited (PPHL), having 34.06% stake as on 31st March 2017. PPHL has invested in Benani during 2015. Consequent to amalgamation of PPHL with the Company, Benani has become direct investee in the Company.
Since 2014, Benani has scaled up in the last 4 years supplying to over 1000 retail outlets in Chennai and also to institutional customers like educational institutions, hospitals, restaurants, corporates etc., Benani’s retail sales has gone up to 49% in 2017-18 though institutional sales has come down due to GST.
The Company currently holds 41.80% in Benani. Though the shareholding and Board composition in Benani is less than half, since the Company has affirmative voting rights, the Company is considered to have significant influence in Benani under applicable Indian Accounting Standards. Hence, Benani is considered as a subsidiary of the Company.
During the year 2017-18, Benani’s revenue was Rs. 444 Lakhs. Being a start up company, Benani has posted loss of Rs. 197 Lakhs, due to high sales and distribution costs. Benani is planning to improve sales in the current year to increase number of retail customers through 1500 shops.
Though Benani is not a material subsidiary, the Company has nominated a director to the Board of Benani to oversee the performance of the subsidiary. Further, the Board of Directors of the Company review the performance of the subsidiary in its quarterly board meetings, as well.
The Consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and Regulation 33 of SEBI (LODR) Regulations, 2015.
A Statement in form AOC -1 under Section 129(3) of the Companies Act, 2013 is enclosed as Annexure A. The audited consolidated financial statements together with Auditors report forms part of the Annual report.
Pursuant to the provisions of Section 136 of the Companies Act, 2013, the audited financial statements of BFPL will be made available to the shareholders, on receipt of a request from any shareholder of the Company and it has also been placed on the website of the Company at www.tvs-e.in. This will also be available for inspection by the shareholders at the Registered Office of the Company, during business hours.
Extract of Annual Return in Form MGT-9 is given as Annexure B to this report.
Number of Board Meetings
The Board of Directors met five times during 2017-18. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.
The paid up share capital of the Company as on 31st March 2018 is Rs. 18,61,28,180/- consisting of 1,86,12,818 Equity Shares of Rs. 10/- each. During the year, the Company has not issued any fresh shares.
Particulars of Loans, Guarantees or Investments
The Company has not granted any fresh loans or guarantees or provided any security in connection with any loan to any other body corporate or person covered under the provisions of Section 186 of Companies Act 2013. The details of investments made by the Company are given in the financial statements.
Related Party Transactions
All the related party transactions entered into are on ‘arm’s length’ basis and in the ordinary course of business and are in compliance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. None of the transactions are in the nature of having any potential conflict with the interests of the Company at large. There were no material related party transactions during the year.
Omnibus approvals are obtained for related party transactions which are repetitive in nature. In respect of unforeseen transactions, specific approvals are obtained. All related party transactions are approved / reviewed by the Audit Committee on a quarterly basis, with all the necessary details and are presented to the Board and taken on record. The details of transactions with related parties are provided in the financial statements. The Related Party Transactions policy as approved by the Board is uploaded on the Company’s website at www.tvs-e.in.
Directors and Key Managerial Personnel Independent Directors
All independent Directors hold office for a fixed period of five years and are not liable to retire by rotation. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16 (1) (b) of the SEBI (LODR) Regulations. 2015. The terms of appointment of Independent Directors are available in the Company’s website www.tvs-e.in.
During the year, Mr. Kenneth Tai, an Independent Director resigned from the Board of Directors of the Company with effect from 9th November 2017. The Board places on record its deep appreciation for his valuable advise and guidance and for his contribution to the Board during his tenure with the Company.
Separate Meeting of Independent Directors
During the year, a separate meeting of Independent Directors was held on 12th May, 2017. The Independent Directors actively participated and provided guidance to the Company in all its spheres.
Retirement by rotation
Mr. Narayan K Seshadri (DIN: 00053563), Director retires by rotation at the ensuing Annual General Meeting of the Company under Section 152(6) of the Companies Act, 2013 and being eligible offers himself for re-appointment.
The Board of Directors at their meeting held on 11th May, 2018, based on the recommendation of the Nomination and Remuneration Committee (NRC), appointed Mrs. Srilalitha Gopal (DIN: 02329790), as Managing Director of the Company, liable to retire by rotation, for a period of 5 years from 11th May 2018 to 10th May 2023, for a total remuneration of Rs. 1.50 Cr p.a. subject to approval of the shareholders.
Both NRC and the Board observed that the proposed appointment of Mrs. Srilalitha Gopal as Managing Director satisfies the requirements of the provisions of Section 196(3) and Part I of Schedule V of Companies Act, 2013.
Mrs. Srilalitha Gopal is also the Managing Director of Harita Techserv Limited (Harita), a company engaged in design engineering and skilled technical engineering service business since 2008. As the Managing Director of both Harita and the Company, she is entitled to draw remuneration from one or both the companies, provided that the total remuneration drawn from both the companies does not exceed the higher maximum limit admissible from any one of such companies.
In the case of inadequacy of profits, she will be paid the same proposed remuneration as the minimum remuneration, subject to the maximum applicable limit under Part II Section II Para A of Schedule V of Companies Act 2013, read with provisos thereunder, based on the effective capital of the Company.
In terms of Section 149 of Companies Act, 2013 and SEBI(LODR) Regulations, 2015, the Company is required to have a woman director on its Board. Mrs. Srilalitha Gopal, Managing Director is already on the Board of the Company from 10th November 2011 and hence the Company fulfills the requirements of the said section.
Brief resume of Directors
The brief resume of directors proposed to be appointed and re-appointed and other relevant information have been furnished in the Notice of Annual General Meeting (AGM). Appropriate resolutions for their appointment and re-appointment are being placed for approval of the shareholders at the AGM.
Key Managerial Personnel (KMPs)
In terms of Section 2(51) and Section 203 of the Companies Act, 2013, Mrs. Srilalitha Gopal, Managing Director, Mr. Prakash Katama, Chief Executive Officer, Mr. Karthi Chandramouli, Chief Financial Officer and Ms. S Nagalakshmi, Company Secretary are the key managerial personnel of the Company, as on date of this report.
Evaluation of the Board’s performance
The Board has carried out an evaluation of its own performance, and that of its directors including Independent Directors individually and the sub committees of the Board. The manner in which the evaluation has been carried out is explained in the Corporate Governance report.
The Company has also devised a Policy on Board Diversity detailing the functional, strategic and structural diversity of the Board.
Nomination and Remuneration Policy The Nomination and Remuneration Committee of the Company review the composition of the Board, to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of the shareholders of the Company.
In accordance to Section 178 of Companies Act, 2013, the Nomination and Remuneration Policy was formulated to govern the terms of nomination, appointment and remuneration of Directors, Key Managerial and Senior Management Personnel of the Company.
The Policy ensures that (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully; (b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The Policy has been approved by the Nomination and Remuneration Committee and the Board. The Remuneration Policy document as approved by the Board is available on the Company Website www.tvs-e.in.
M/s Deloitte Haskins & Sells, Chartered Accountants (FRN:008072S) were appointed as the Statutory Auditors of the Company at the 22nd Annual General Meeting of the Company held on 30th June 2017 for the first term of 5 years to hold office up to the conclusion of the 27th Annual General Meeting. in terms of the notification issued by Ministry of Corporate Affairs dated 7th May 2018, the requirement of obtaining shareholder’s ratification every year has been done away with and requires only the Board approval. Accordingly, the Board of Directors of the Company at its meeting held on 11th May 2018 approved their appointment for the 2nd year (2018-19) in their first term of 5 years to hold office till the conclusion of next annual general meeting.
The Company has appointed M/s. Grant Thornton India LLP, as the Internal Auditors for the year 2018-19.
In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audits) Rules, 2014, printers manufactured by the Company and falling under the specified Central Excise Tariff Act heading are covered under the ambit of mandatory cost audits from the financial years commencing on or after 1st April 2015.
The Board of Directors appointed Mr. P Raju Iyer, Cost Accountant, Chennai as the Cost Auditor of the Company, to carry out the cost audit for 2018-19.
The Secretarial Auditors of the Company M/s. S Krishnamurthy & Co., Practising Company Secretaries, Chennai carried out Secretarial Audit for the financial year 2017-18 and the same is annexed as Annexure C.
The Company has complied with the applicable secretarial standards during the year.
Clarification to the observations in the Secretarial Audit Report
The Company is in the process of identifying a suitable person for the position of Independent Director and the process is expected to be completed shortly. Once the appointment is made, the Board composition will also be in accordance to the SEBI (LODR) Regulation, 2015. The rest of the observations are self explanatory and hence does not call for any further clarification.
Employee Stock Option Plan
During the year, no stock options were granted under the Employees Stock Options Scheme, 2011. The current position of the Stock Options granted under Employees Stock Option Scheme 2011 are provided in this Report as Annexure D.
The Company has obtained credit rating for the various borrowing facilities from Brickworks Ratings India (P) Ltd., and the same has been renewed and intimated to the Stock Exchanges.
Transfer to Investor Education and Protection Fund
There was no amount required to be transferred to Investor Education and Protection Fund during the year.
Particulars of Employees and related disclosures
The particulars of the employees covered by the provisions of Section 197 (12) of Companies Act, 2013 and the rules thereunder forms part of this report. However, as per the provisions of Section 136(1) of Companies Act, 2013, the annual report is being sent to all the members excluding this statement. This will be made available for inspection at the Registered Office of the Company during working hours.
Comparative analysis of remuneration paid
A comparative analysis of remuneration paid to Directors and employees with the Company’s performance is given as Annexure E to this report.
The Company is well ahead in terms of e-waste management compliance directed by Government of India with effect from 1st May, 2012. The Company has registered and authorized collection, storage and disposal centres in the required locations and has complied with the statutory requirements relating to E-Waste Management.
Report on energy conservation, technology absorption, foreign exchange and research and development
Information relating to energy conservation, technology absorption, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are given in Annexure F to the Board’s Report.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) activities have been embedded in the value system of the Company for many decades. The Company continues to be actively engaged in CSR initiatives for development of the society through partnerships and continued to focus on to helping lesser privileged communities in areas like education, health & hygiene, culture & heritage and actively participated in other welfare projects.
The provisions of Section 135 of Companies Act, 2013 became applicable to the Company with effect from 1st April 2017. Accordingly, the Board of Directors of the Company, at their meeting held on 12th May 2017, constituted the CSR Committee, the details of which are provided in the Corporate Governance report.
Based on the recommendation by the CSR Committee, the Board has approved the projects / programs to be undertaken as CSR activities for a sum of Rs. 13 Lakhs during the financial year 2017-18. The details of CSR activities has been provided as Annexure G to this report.
Pursuant to Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report and a Corporate Governance Report are made part of this Annual Report.
A Certificate from the Practising Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is forming part of Annual Report.
The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Companies Act, 2013 for the year ended 31st March, 2018.
Material changes and commitments
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.
Significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company
There are no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of the Company and its future operations.
Reporting of Fraud
During the year under review, neither the statutory auditors nor the secretarial auditors has reported any instances of fraud committed against the Company by its officers or employees, as specified under Section 143(12) of Companies Act, 2013.
During the year under review, no complaints have been received under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no complaints pending for disposal.
Directors’ Responsibility Statement
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultants, advisors of the Company and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2017-18.
The financial statements have been prepared in accordance with the Indian Accounting Standards, which has become applicable to the Company with effective from 1st April 2017.
In terms of Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, further confirm:
i. that in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable Indian accounting standards have been followed and that there were no material departures;
ii. that they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2018 and of the profits of the Company for the year under review;
iii. that they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that they had prepared the annual accounts for the year ended 31st March, 2018 on a “going concern” basis;
v. that they had laid down internal financial controls which are adequate and are operating effectively;
vi. that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Directors wish to place on record their appreciation for the committed service of all the employees.
The Directors would also like to express their grateful appreciation for the assistance and co-operation received from the customers, dealer partners, business partners, bankers and its holding companies TVS Investments Private Limited and T.V.Sundram Iyengar & Sons Private Limited.
The Directors thank the Shareholders for the continued confidence and trust placed by them in the Company.
For and on behalf of the Board
11th May, 2018 DIN: 00177699